Fed stress tests on the banks will require lenders to show they can withstand a recession in...

Fed stress tests on the banks will require lenders to show they can withstand a recession in which unemployment rises more than 400 bps, GDP declines 5%, equity prices fall more than 50% (along with the VIX jumping 70%), and residential and commercial property values fall more than 20%. It sounds harsh, but it's still not as bad as what happened from 2007-09. Capital plans are due on Jan. 7.

This is a joke. The VIX jumping 70%? That would take us to 32 on the VIX, which is not even high if looking back at the peaks over each of the last 4 years. A 20% fall in property prices is also pretty plain vanilla.

This is the, "no bank shall be under $100 billion in asset size" test, or the "regulators are tired of going to small town USA for an exam, and only want to live in Charlotte or NY or some other big city so we are going to get rid of community banks" test.